Takata may plunge by the daily limit after the company emerged as its top bidder. Takata says a company recommended a bid over that of another. Key is the worlds fourth biggest airbag maker but has just over 4 of market share. Currentlyres are untreated after falling for the last two sessions. Global news 24 hours a day powered by 2600 journalists and analysts in 120 countries. Lets get you a check of the markets. Afternoon trading just getting underway in hong kong and china. Asian markets all in the green. This is bloomberg. Caroline i am caroline hyde. This is the best of Bloomberg Technology. Where we bring you our top interviews from this week in tech. Coming up, snap filed for an ipo, 3 billion, the details ahead. Plus, apple sales at an alltime high and facebook sees mobile ad revenue pop. We break down the big tech earnings of the week. And the inside track on ges digital pivot, the ceo shares how the biggest manufacturers turned to big data and won. A bloomberg exclusive interview. This week, snap filed its longawaited ipo with an initial price of 3 billion, planning to raise 4 billion for a market value of 25 billion. The Parent Company of snapchat is the first u. S. Social Media Company to go public since twitter. The ipo is the first opportunity for outsiders to get a close look into the company known for its culture of secrecy. We caught up with the Bloomberg Technology reporter. And the managing director of general capitalist, who also happens to be an investor. I was looking at revenue of 404 million last year, and a net loss for the same year of 514 million. You can see how much cash this company is burning. I bring that up because we have seen the headline daily active users, the revenue number, but we did not have a sense for how much they are having to spend to get there. This is the first glimpse that investors have to take into account. Can i balance the amount they are spending with the opportunities they are pitching when im trying to get to that 25 billion market valuation . Caroline when you are looking at the Business Model in general, we are seeing a Secretive Company having to disclose significant losses, but that valuation . Can it be vindicated . The thing i started looking at intently were the risk factors. There are familiar things. There is the competitive landscape. The fact it keeps getting copied by facebook and instagram, companies with more resources and reach. There are issues like founder control. Alex mentioned we will have to see if we want to bet on this company longterm. The founders will retain the majority of voting control. The user growth, after twitters ipo, that is what people are talking about. User growth at snapchat is 158 million daily users, more than twitter has, but a little bit more than instagram has for the product that copies snapchat. Exactly. Instagram has 400 million overall. Caroline we have a fascinating approach from you, the cofounder of evernote. But also, now in your role as a vc. General catalyst is an investor in snap. Is the timing right . What makes this attractive . I do not want to say too much of what the company has not been revealed. We are super excited about snap. Very few companies change Consumer Behavior as they did. Maybe three or four over the last decade. So they are in extremely good company, a consequential product, and amazing execution. So i think the enthusiasm for the ipo bodes well for the rest of 2017. Caroline we have a company exiting investors, how excited and willing have they been . This is a down time for tech ipos. There has not been a lot of new issuance out there. That does bode well for the snapchat listing, and they have not been able to make a big bet with a lot of shares offered that promises returns and big growth, which is what snap is pitching here. And as may kind of cycle through, looking at the first few pages, we do see a lot of looking back on the past development. We dont see a lot of roadmapping going forward. There is strategic vision, but again, to sarahs point, when you look at the information that investors will digest, you have the numbers, and you have to believe the story management is pitching throughout the roadshow when you are considering opening your pocketbook. Caroline you didnt go public. What are the trepidations as a founder when looking to go to the market . Why is there not as much meat to the bone as the potential of snap . I think it is always a tradeoff between access to capital and how much distraction there is. And as a ceo and founder, you pick the best combination of that. Where we were at at a smaller scale, it was easy to have as much access as we needed on the private markets, and going public is a lot of work and kind of a distraction because you wind up having to be more open and match wall street time estimates. Snap is doing amazing innovation. Look at all of the products they have built, augmented reality, wearables. They probably have more stuff that is in a longer timeframe then quarter to quarter. Snap said its performance will be lumpy. That they will have to make fits and starts of investment in new products, and their Revenue Growth may not be predictable. Caroline it is the addiction as well. When you are looking at 158 million daily active users, they are going back every hour, minute. Right. They are so engaged. The engagement is the behavior change. This is why it is a good time for snap to go public because they have done something to transform the way people live their lives. And it is morally great to give everybody who wants a part of that in opportunity to do it. Caroline sticking with snap, how does the app make money . Dont know how an app that sends disappearing pictures makes money . You are not alone. The first thing to note is that snapchat is not just selfies. Now they are pitching themselves to investors as a camera company. And unlike facebook and twitter, snap is not just about ads. Core to their concept is creating content. And that is what revenue generators are all about. Lenses, you are straight into the camera. Brands can pay for filters that you can overlay on photos and videos and send them to a friend or group. Geofilters overlay the where and when that the businesses and people can pay to include a app. I can also send my snap to a feed which my friends can see. Which brings us to our third revenue generator. Our story. Our story is a group of feed that snap goes through and grabs publicly posted snaps and puts it into one video feed. We have seen this around in events like the womens march or Donald Trumps inauguration. Every day people are not the only ones uploading snapchat. Enter discover, starting in 2015, brands started uploading mobile magazines that create stories in a more millennialfriendly version. With ads slotted in between, of course. You cant forget the spectacles. You can grab these for 130 at popup vending machines around major cities. You take a 10 second videos and it goes straight to your snapchat app. And lets mention for a second that advertisers for a while have been wary of using snapchat, because they are insistent on vertical video ads, when advertisers are used to the horizontal shape of tv. They are warming up to it. How does it work . The true test will come in the years after snap goes public, because the revenue model is only a couple of years old. Caroline coming up, fitbit struggling to maintain momentum. The stock taking a hit this week. More details ahead. Plus, we dive into apple earnings. Ceo tim cook said the Companys Services business will be the size of a fortune 100 business in 2017. Here he is with more. It was our best quarter ever for services. With almost 7. 2 billion in revenue. App store customers broke alltime records during the holiday, including 3 billion in purchases in december alone, making it the app stores single best month ever. Caroline fitbit had a rough week, plunging 16 . The company is eliminating 6 of its workforce because of falling demand. That is about 110 jobs. The fitness tracker is forecasting fullyear revenue grew 17 , down from a previous forecast of 26 . And another big mover for the week, apple shares popped after reporting firstquarter revenue of just under 78. 5 billion. That is up 3 . Also encouraging investors, a beat on iphone unit sales, 78 Million Units in the quarter due to Strong Demand for the iphone 7, and its Services Business saw 18 Revenue Growth. That includes itunes and apple pay. A principal analyst with Forest Research joins us with more. Iphone sales make up the majority of apples revenue at this time. While the we look at global smart phone subscribers, that number will grow about 50 over the next five years, but apple makes a lot of money selling phones, unlike some of their competitors. If we look at the markets they are pursuing, middleclass and upperclass, that growth will not be as high. When we take that into account, it is doubly impressive, the numbers that they have posted for 2016. Caroline what was coming across was they are doubling down on the services area, doubling the size of this unit, which is as big as a fortune 100 company, they say, doubling that over the next four years. How much do you think that services is the right bet for apple . It is absolutely the right bet, until they start selling other appliances like refrigerators and cars, there are only so many smart phones and apple tvs and smart watches you can sell. I think there are some areas like apple pay where there is low consumer adoption, a love only 11 in the u. S. , but a lot of services on the upside. Caroline when you look at the other products they sell, the cfo saying this is ipods, apple tv, a new product from last year, but do they need another product . The watch looks like it is selling relatively well, a record Fourth Quarter . I dont know if they need another product. Smart watches are only a fraction of total wearables, but they will be as large about 40 in five years, so there is a lot of upside as we move from 18 of u. S. Adults owning a wearable to 29 in four years. Caroline i think also what struck me was the lack of mention of china. Particularly from the cfo. Brazil is going well, turkey going well, but china seems to be a slow down area. Are they right to focus on china or switch to india . Getting back to the point, apple makes it a lot of money selling phones. They are profitable. They want to sell phones profitably. You have to look at the markets where there is the most upside. China is a tougher market, but they have done well. But not where their biggest growth will come from. Caroline would india be the right sort of country given the average earnings power in india is less than china. Do they have as much of an opportunity in that country, do you think . I think there is almost more of an opportunity in india. If we look at the growth of smartphone adoption in china, 50 over the next five years, but in india, that will almost double. If you look at each market, about one billion people, the middleclass and upperclass are still very large markets, even bigger than the United States. A lot of upside. Caroline staying with apple, a bloomberg scoop. The company is designing a new chip for mac laptops. The new chips would take on more functionality currently handled by intel processors. They are already used in the latest macbook pro. Facebook earnings out this week, and mobile ads continue to dominate the companys revenue. We will break down all the numbers next. Caroline now to facebook earnings, a 51 jump in sales to 8. 8 billion, topping projections. The big driver, advertisers continue to push to reach consumers on mobile phones. The social Networks User base is continuing to grow, 2 billion monthly active users reported. 1. 75 billion users using their smartphones. This move solidifies facebooks position behind google. I am sure there are some people who would be upset that the numbers arent even better than they are, but come on, i think that analysts were expecting incredible results, and pretty much everything beat it. We have 25 of the worlds population using the platform on a monthly basis. I cannot see any clouds there. Caroline amazing. On a daily basis, three times the u. S. Population. That is 1. 2 billion people addicted to this particular app. David, dig into the growth of drivers. When i was speaking to the cfo, he was trying to point out that its business is mobile, now 5 million instagram. That is big growth. David they are doing superbly on mobile. When i look at Growth Drivers and think about where they are, the real prospects going forward, it is the truly Global Nature of their business. If you look at the growth in asia and the rest of the world, africa, latin america, they are doing surprisingly well, and this is where ive thought their longterm potential was, because they make 10 times more per user in the United States than they do in asia, and yet, the opportunity down the road to build those numbers more to parity is real, so they are getting faster user growth in those regions and making more money per user. So, i would start there. Their asian revenue was up 59 . That is really impressive. And the rest of the world, 52 , so even though the numbers are small compared to the u. S. And europe, there is opportunity longterm. Caroline the potential needs feeding. We are hearing the cfo saying they are not backing away from the view that they do need to spend aggressively. It seemed to be the head count, 34 ramping up in the Fourth Quarter, and they will accelerate that more in 2017. Are they spending wisely . I think so. I mean, to achieve innovation, whether ad products or expansion, you have to have the resources to do it. If you have the cash, that is where to spend it. The idea of ad product animation innovation goes hand in hand with feature set innovation, and that will change as they cloak Global Markets as well. The expectations in asia are different than the u. S. , the u. K. , and europe, so you have to invest smartly and get the best engineers to do it. Yes, i do think it is smart. Caroline david, what about the move to video . Video is what Sheryl Sandberg and Mark Zuckerberg have been bringing up. Still mobile, still video, and there is a wall street journal piece out saying they may be developing a tv app. Is video still hot . David i think that is where they can compensate for this problem where they have saturated our news feeds, particularly mobile, with as many ads as we could handle. So either they have to charge more per ad or grow their user base, or find other kinds of ads that make more money, and video ads can do that. I thought the journal piece suggesting that they could have a settop box, a tv app, but my guess is they would like to have some kind of app that allows you to watch tv and still be on facebook on tv. They have tried various versions of this in the past, but it has not worked. If they can make it work and show us ads while were watching tv, they can continue raking in more dough. Caroline Mark Zuckerberg saying he will seek original content deals and is still putting video first. Melissa, i will find a cloud in the silver lining. Because earlier today, it looks like facebook did lose out in court, oculus intentionally built on stolen technology. 500 million, the damages they will have to pay. That is a quarter of the price tag of what they bought it for in 2014. Is this of particular concern . Melissa oh, gosh, i dont know. Of course it is a concern. It is a court ruling that will hit the pocket book. That is always a concern. I do not want to minimize that. And of course, oculus being an engine for innovation, anything that questions its source code is going to be of concern, but 500 million is something that will continue to be litigated for a while, versus the growth for the core platform. I am sure it is a concern. Is it a dealbreaker . I cant see it as being that. Caroline david, what about fake news and how much zuckerberg has been trying to respond to this, potentially awkwardly to begin with, but now with some fervor and perhaps trying to orchestrate how he interacts with his own user base. David it is a concern to the intelligentsia. It is not a concern to the average facebook user. Mostly they want to be entertained and diverted, and they are. I do think facebook is taking the issue seriously. I think you will see them taking more and more measures to try to avoid seeming to compound the partisanship that is so big a problem in so many societies around the world. The problem is they are so global and operating in so many languages that this problem is global, even the russian interference in the media, so it will not be easy to get a grip on this right away. I think they will over time. Could i quickly on oculus, i think oculus is looking like something they overpaid for. Unlike instagram on which they got a spectacular deal. Palmer lucky who may take some of the blame for this lawsuit loss, also some embarrassing behavior around politics. Maybe they are regretting their association with him. On the other hand, they have brought hugo barra in to take over oculus. I think he will be a great leader for that part of the company. Caroline coming up, tech mobilizes against the travel ban. We cut through the confusion and chaos and analyze the opposition out of Silicon Valley. A reminder, all episodes are now Live Streaming on twitter. Check us out at bloombergtechtv weekdays at 5 00 p. M. In new york, 2 00 p. M. In san francisco. This is bloomberg. Ofoline the head president Trumps NationalEconomic Council has taken aim at the dodd frank law, stopping banks for lending. Cohn says the administration will attack all aspects of dodd frank as it looks to boost jobs growth. Banks working get again, to be back in the lending business. Dodd frank stopped banks from lending to small and mediumsized businesses, and to entrepreneurs. Reporter indonesias economy grew at a slightly sewer pace than the economists estimated. Gdp rose nin 4. 94 . Rates were cut six times last year, but growth is still undershooting the 7 target. Now, a chinese dealmaker could be closer to purchasing the singaporean warehouse own